Form 8889 for deceased account holder where funds received but I wasn't designated beneficiary
The below is what I see on the instructions for filling Form 8889 at the IRS instruction website:
If the designated beneficiary is not the account beneficiary's surviving spouse, or there is no designated beneficiary, the account ceases to be an HSA as of the date of death. The beneficiary completes Form 8889 as follows.
Enter “Death of HSA account beneficiary” across the top of Form 8889.
Enter the name(s) shown on the beneficiary's tax return and the beneficiary's SSN in the spaces provided at the top of the form and skip Part I.
On Part II, line 14a, enter the fair market value of the HSA as of the date of death.
On Part II, line 15, for a beneficiary other than the estate, enter qualified medical expenses incurred by the account beneficiary before the date of death that the beneficiary paid within 1 year after the date of death.
Complete the rest of Part II.
If the account beneficiary's estate is the beneficiary, the value of the HSA as of the date of death is included on the account beneficiary's final income tax return. Complete Form 8889 as described above, except you should complete Part I, if applicable.
The distribution is not subject to the additional 20% tax. Report any earnings on the account after the date of death as income on your tax return.
Firstly, am I right in understanding that this is what I need to do and that I will not be subject to additional 20% tax or should I just report this as income instead and not follow what is said above?
If I need to do the above mentioned instructions, how do I do it via FreeTaxUSA? I've tried different options for filling in HSA details but I'm unable to do the above.
Comments
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Hi bebepong,
I am sorry, but our software does not appear to support this situation. I suggest that you contact Customer Support while signed into the account to report the issue. You may need to use another software product or a paid tax professional.0
